3 Changes That Could Be Coming to Social Security Now That Congress Is Republican

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This election cycle has seen Congress shift to full Republican control, as the party maintained its majority in the House of Representatives and gained a three-seat majority in the Senate. This leaves many Americans wondering how this change might impact Social Security. 

Social Security provides financial stability for millions of retirees, disabled individuals and survivors. However, the Republican Study Committee (RSC) proposed a budget in early 2024 that seeks $1.5 trillion in cuts to Social Security.

With a Republican-controlled Congress, it is more likely that the following proposed changes will be put into law. 

Raising the Retirement Age

One of the most frequently discussed reforms is raising the retirement age. Currently, the full retirement age for Social Security benefits is gradually increasing to 67 for those born in 1960 or later.

Given increasing life expectancy and the financial strain on the Social Security Trust Fund, Republicans have proposed raising the retirement age to 69. 

This change aims to reduce the number of years benefits are paid out, thereby extending the solvency of the program. While this proposal is intended to extend the program’s solvency, the U.S. Senate Committee on the Budget (COB) found that increasing the retirement age would not change the year Social Security is projected to reach insolvency. Additionally, this change is likely to disproportionately impact low-income retirees.

Modifying the Cost-of-Living Adjustments (COLA)

Cost-of-living adjustments (COLA) are designed to help Social Security benefits keep pace with inflation. Currently, COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Some Republicans have proposed switching to the Chained Consumer Price Index (C-CPI), which typically grows more slowly than the CPI-W.

Proponents argue that the C-CPI more accurately reflects changes in consumer behavior and inflation. Since the C-CPI would result in lower annual benefit increases, switching to this index could save the Social Security program money over time. 

Critics, however, contend that this change could result in smaller benefit increases for retirees who rely on Social Security to pay for necessities that increase in cost every year, such as groceries and medication.

Opponents of the Republican COLA adjustment proposal have also proposed using the Consumer Price Index for the Elderly (CPI-E) instead, which looks at spending among those 62 and older. The CPI-E grows more quickly than either the CPI-W or C-CPI, and would therefore result in higher annual benefit increases and quicker program insolvency.

Means Testing for Benefits

Another potential reform is the introduction of means testing for Social Security benefits. Currently, benefits are primarily based on an individual’s earnings history and the amount they have contributed to the system.

This means that regardless of the amount someone has saved for retirement, their contributions during their working years dictate their benefits in retirement.

Means testing would adjust benefits based on an individual’s income and assets, with higher-income retirees receiving reduced benefits or none at all. Advocates believe means testing would reserve Social Security resources for those who need them most, and help prolong the program’s solvency.

Opponents argue that it undermines the universal nature of Social Security and could disincentivize saving for retirement.

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